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Bet again on AIG? Count me in

Despite all that AIG has gone through, it still has a solid foundation, the author argues. |
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Before I get too carried away with gloating about this turnaround, let me state unequivocally that no one wants — or should ever expect — a federal government bailout. Even Greenberg said that his baby should go bankrupt — because that could have offered a clearer path to recovery.

But the bailout was the right thing to do — and I said so at the time.

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I even insisted that the controversial bonuses were worth it. They helped retain expertise needed to unwind the complex financial products that got AIG into such dire trouble. While other financial experts could have been found, by the time they familiarized themselves with the specific deals, billions more could have been lost. These bonuses were also contractual obligations, and lawsuits could have resulted if they were not paid.

Right now, I have faith in AIG. I know its history of creating unique insurance products for people and institutions that no one else wanted to insure. It started with the founder, Cornelius Vander Starr, who established an insurance agency in China. Starr was the first and only Westerner in Shanghai to sell insurance to the Chinese. AIG had this market to itself until the Communists took power in 1949.

Greenberg reopened China for AIG in the 1970s. In addition, he pushed the company to specialize in special products — like offering kidnapping insurance in unstable countries.

Today, AIG has a solid strategy. It has restructured, with two core businesses — Chartis, its property and casualty arm, and SunAmerica, the domestic life company, which also offers retirement products. Chartis remains the largest property-casualty insurer in the world.

The markets recognize this turnaround. In November, AIG held its first bond offering since the crisis and raised $2 billion. More recently, a consortium of banks granted AIG a $3 billion credit line, replacing the government credit line.

So when the AIG shares go on the block, I will be there — even with the pain of losing hundreds of thousands of dollars still fresh in my mind.

Ron Shelp held a number of senior positions at AIG, including worldwide head of government relations and director of corporate communications. He is the author of “Fallen Giant,” a history of AIG.